The crypto market just faced a harsh reality check. For months, investors held onto the hope that the Federal Reserve would soon lower interest rates. Investors expected Bitcoin (BTC) price to continue its rise from early this week if the news went in their favor.
Those hopes are now officially dead. The has decided to remain put, even hinting at a hawkish future. As a result, institutional spot ETFs are taking a massive hit. On the backdrop of this, BTC price has also fallen below the $63,000 mark.
Fed Stays Put, Hints at Hawkish Path Ahead
The major shift comes directly from the Federal Reserve’s latest policy meeting. Under the leadership of the new Fed Chair, Kevin Warsh, the central bank decided to keep interest rates exactly where they are. However, it was the tone of the meeting that truly rattled Wall Street and the crypto world.
Chair Warsh completely scrapped traditional forward guidance and shortened the official statement. Even worse for investors, half of the Federal Open Market Committee (FOMC) members now foresee another rate hike before the year ends.
Markets are pricing in a staggering 90% probability of a rate hike. This aggressive, inflation-focused stance has forced traders to realize that cheap capital is not coming back anytime soon.
Bitcoin Suffers ETF Outflows
Institutional investors are quickly reacting to this hawkish pivot by pulling their money out of crypto products. The brief relief rally seen earlier in the week completely evaporated. Spot Bitcoin exchange-traded funds (ETFs) registered $82.2 million net outflow in a single day, per CoinGlass report.
Fidelity’s was one of the few funds to see minor inflows, but it was not nearly enough to save the day. The bleeding is not the full picture for BTC. While capital pours out of ETFs, Bitcoin’s largest wallets are buying the dip.
Addresses holding 1,000 or more BTC now control about 7.17 million coins, their highest since March 14, according to Santiment. The number of these wallets have also increased to 2,044.
BTC Drops Below $63K
With institutional selling pressure mounting, the Bitcoin price could not hold its gains from early this week. Bitcoin steadily gave up its recent gains and slipped below the critical $63,000 support level, trading near $62,700, per CoinMarketCap.
This drop comes on the backdrop of a 4.5% plunge on the daily chart. Bitcoin price now stands at $62,700. It places Bitcoin roughly 17% underneath its on-chain True Market Mean of $77,200.
Data shows that recent short-term buyers are now average-wise 10% underwater on their positions. While deep buyers look at these dips as historic entry points, the immediate spot market is feeling the squeeze of a strengthening US dollar.
BTC Technical Indicators Turn Bearish
The short-term technical picture for the digital asset looks increasingly bearish. On the Investing.com technical charts, Bitcoin has slipped into a strong sell position. Key moving averages are beginning to roll over, signaling that sellers are currently dictating the market’s direction.
Momentum indicators like the RSI 14 and CCI (14) are dropping back into bearish territory, showing a clear lack of buying pressure. Furthermore, capital rotation out of crypto and into traditional AI trades is stalling a quick recovery. Unless Bitcoin can rapidly reclaim the $64,000 zone, the path of least resistance remains skewed to the downside.